Michael J. Rosen

Michael J. Rosen is President of ML Innovations, Inc., a fundraising and marketing consulting firm serving nonprofit organizations and the companies that assist them. An AFP Certified Master Trainer and winner of the prestigious AFP/Skystone Prize for Research, Michael is the author of the bestselling book "Donor-Centered Planned Gift Marketing."

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Are You Making the Same Mistake as Whole Foods Market?

Whole Foods, a supermarket-industry leader recently acquired by on-line retailer Amazon, has received some bad publicity this month. Consider the following headline appearing in The Boston Globe:

Empty Shelves at Whole Foods Have Customers Going Elsewhere”

The Globe reports that many customers are beginning to shop elsewhere because of empty shelves and declining quality:

Whole Foods customers in Bellingham have been struggling to find English cucumbers and sweet onions. In Newton, shoppers have been disgusted to realize that the organic celery they purchased was mostly rotten. Shoppers in Hingham have complained about half-rotten bags of clementines, while those in Newtonville say they were unable to purchase tofu all last week.”

My wife and I shop at a Whole Foods Market just a few blocks from our home in Philadelphia. We’ve experienced similar problems with out-of-stock or poor quality items. Now, we shop far less often at Whole Foods, despite its convenient location. Instead, we increasingly shop elsewhere. For example, MOM’s Organic always has a great selection of high-quality items. In addition, we’ve found that our local Acme Market, a traditional supermarket, has a better selection of high-quality organic items than our Whole Foods.

Whole Foods is making a number of serious mistakes:

assuming it can rely on brand loyalty and its now outdated reputation.

being unresponsive to customer needs.

ignoring the fact that customers have options of where to shop.

Sadly, those are three mistakes that many nonprofit organizations also make. As a result, donor-retention rates are pathetically low. The average overall donor retention rate is approximately 45 percent, according to the 2017 Fundraising Effectiveness Survey Report. The Fundraising Effectiveness Project is a partnership between the Association of Fundraising Professionals and The Urban Institute. The FEP website provides a variety of reports and helpful tools for enhancing donor retention.

Many charities think they can rely on their reputations to achieve strong donor retention rates. Unfortunately, while that might have been the case with brand-loyal Baby Boomers, it’s no longer the norm. Donors want to know that their gifts are making a difference. Moreover, they’re not willing to assume you’re using their money wisely. They want evidence of your effectiveness.

If you don’t provide a meaningful experience for donors by providing them the information they demand and by meeting their varied needs, they will stop giving to your organization. However, that does not mean they will stop giving. They will simply give elsewhere.

Just as Whole Foods shoppers have options, your donors have choices. While your donors appreciate your mission, there are almost certainly other organizations that have a similar mission. After all, there are well over one million public charities, according to the National Center for Charitable Statistics.

In case you want to chalk-up pitifully low retention rates to the mere fickleness of your lower-level donors, MarketSmart provides some shocking news after analyzing over $20 billion in charitable giving. Among those who have made a donation of $5,000 or more, the retention rate is just 47.65 percent!!!

4 Comments to “Are You Making the Same Mistake as Whole Foods Market?”

Excellent post, Michael. We’re seeing this over and over in major gift files. Donor and Donor Value attrition in the 40-60% range. That is hundreds of thousands to millions of dollars going away each year because we are not cultivating, stewarding or serving our donors well. We take them for granted. Thanks for reminding all of us to take care of our donors.

Jeff, thank you for the kind message and for sharing your insight. Despite all of the years I’ve been a fundraising professional, it still pains me when I see donors being taken for granted. Part of the problem rests with fundraisers. However, I suspect that a big part of the problem rests with CEOs, CFOs, and boards. We need a culture shift in the nonprofit sector if we’re going to have real change. Meantime, folks like you and I will continue to fight the good fight on an organization-by-organization basis.